CH 7 Becker - Cash Flows

Question 1

Operating, Investing, Financing….
1 - Dividend Payment
2 - Receiving a Dividend
3 - Capital Lease Payable
4 - Interest Paid/Expense
5 - Paid to Payable/ Investment
6 - Discount/Amortization
7 - Sale of PPE
7b - Gain/loss on PPE
8 - Proceeds from issuing equity instruments
9 - Debt instruments/ making or collecting loans
10 - Acquisition of cash to buy another asset
11 - Using one asset to satisfy another (no cash involved)
12 - cash advances
13 - Securities

Answer 1

1 - Financing
2 - Operating
3 - Operating
4 - Operating
5 - Financing
6 - Operating
7 - Investing
7b - Operating
8 - Financing (example Common Stock Issuance)
9 - Investing 
10 - Financing 
11 - Disclosure note (ONLY financing when cash is involved)
12 - IFRS Operating 
       GAAP - Financing
13 - Investing except for TRADING securities which are operating

Question 2

Disclosure Items GAAP
1 
2 
3 
4

Exclusively Indirect Disclosures

Answer 2

1 - capital leases obligation
2 - conversion of debt to equity
3 - 3 months or less cash equivalent
4 - non-cash transactions

1 - interest paid
2 - income taxes paid

Question 3

Indirect Method

Gain on sale of securities treatment

Answer 3

Realized Gain is already added to NI; you must only add securities FV at the beginning of the period to get the increase in net income due to the sale

Question 4

NET INCOME > RE means

Answer 4

the difference is that dividends have been declared

Question 5

Balance Sheet and I/S requires CF

Answer 5

Every period and I/S is presented